Sam Winter, founder and CEO of Scottsdale-based Cudos.

January 27, 2020

Alyssa Tufts

21-year-old Valley man looks to bridge retirement gap for millions

For small businesses, the freedom to be their own boss, make their own hours and sell their products or services their way can come at a price – most don’t have retirement benefits and many face a retirement gap.

Cudos, a financial services company based in Scottsdale, is hoping to change that by offering IRA-based retirement benefits to small business owners. Their simple, user-friendly system allows people to sign up for retirement plans online within minutes. Sam Winter, founder and CEO of Cudos, established the company in fall 2019 at just 21 years old. 

Winter said his interest in finance was curated at a young age. “I had always kind of grown up following the stock market, getting particularly involved when I got to middle school,” Winter said. “I just really loved the idea of investing and when I started coding in high school, I combined it with my interest in math to develop some trading algorithms, or black boxes, that could help automate my market analysis. At that point, I was sort of naturally attracted to the FinTech industry.”

By the time Winter was studying finance at Southern Methodist University in Dallas, he said the curriculum wasn’t as fast-paced as he was expecting. “At the time I was spending some off-hours digging into this retirement gap problem and started thinking about my brother, who worked at a local golf club,” Winter said.

“From my experience with investing, I understood the importance of these benefits and knew my brother wasn’t likely to get access to them at the local companies where he worked. So that inspired me to think, ‘there’s got to be a better way to do this’ and that’s really where the idea for Cudos was born. From there I felt like I had to pursue it because not only was it a big entrepreneurial opportunity in an industry I enjoy, but it was also something that was personally significant to me.”

Part of what differentiates Cudos from other financial services companies is that they focus on offering retirement benefits to small businesses. Winter said this is because about half of the private sector workforce doesn’t have access to retirement benefits (in Arizona that’s estimated to be around 58 percent.)  NIRS (National Institute on Retirement Security) research suggests the current retirement saving deficit ranges from $6.8 trillion to $14 trillion.

“When you dig a little deeper into that, you see that it’s primarily small businesses who are driving this deficit. This isn’t surprising because the popular 401(k), which most small business owners are familiar with, is a fairly complex legal framework that’s often expensive and time-consuming to provide. When you take that all into account and imagine offering it to a small crew, where you might expect only a few to participate, it can be very difficult for small employers to justify,” Winter said.

“So, we wanted to put together a different type of program that’s built for the needs of small businesses. One that an employer can set up in a matter of minutes and that allows them to pay just a few dollars a month per participant rather than some high fixed fee that’s not cost-effective when you only have 3-4 participants.”

Cudos offers retirement benefits with quick setup where employees can open their own Roth or IRA online and through streamlined contributions so employees can contribute directly from their own bank accounts and simplified administration for business owners.

“Essentially, we offer individual retirement accounts or IRAs, which are owned and controlled by the individual. Through our online platform, we allow workers to open these accounts, save and invest with us through one of our low-cost investment portfolios. In doing so, we aim to retain the core features which make retirement benefits valuable to workers while providing a program that’s accessible to a severely underserved Main Street market,” Winter said.

Around half of private sector workers do not have access to a retirement savings program through their employer and nearly 74 percent of small business workers at employers with less than 50 employees lack access to retirement benefits.

“Small business owners and their workers don’t have access to these benefits. So, for entrepreneurs who already have so much else on their plate, being able to access a program that helps them save and invest for tomorrow can free up time and energy to focus on what matters most, their business,” Winter said.

“That’s why from day one we were focused on making our employer program as clear and simple as possible. Whether it’s being able to start a plan online in minutes or removing the hassle of payroll deductions with direct ACH deposits instead, Cudos makes it easier for swamped business owners to invest in both themselves and their workers.”

Winter started forming the company when he was 19 and established it when he was 21. As a young entrepreneur, there’s potential for him to become a leader in the financial services space in the future as Cudos grows and is successful.

“It’s very exciting and, if I’m fortunate enough to have that outcome, it would certainly be a dream come true for me. The savings gap is a problem that I’m passionate about and one that I’d love to continue solving. Beyond that the opportunity to work with others in FinTech and to potentially have some influence in the field going forward, helps motivate me to work harder.”

Although Cudos has only recently launched, Winter said they’ve heard a lot of good things from people they’ve been speaking with and in the short term, they are focused on serving local businesses in the Valley. 

“Our goal is to collaborate with our initial cohort of businesses and participants to iterate on our product and to identify opportunities for improvement. As we continue learning and gaining traction in the Arizona markets, we will begin expanding our efforts into nearby states where similar voids exist,” Winter said.

Cudos’ mission is to make retirement benefits accessible to all workers, which Winter admitted is a very ambitious goal, but it’s also “about educating business owners and individuals on the importance of these benefits. I think most people know that saving is important, but without help, it can be difficult for someone to get started on their own. We want to make that easier.

“At the end of the day, I hope Cudos can help some portion of the 50-million plus workers who currently lack access to these benefits, start saving and investing in themselves and to make them realize, ‘I can potentially build the more secure future that I want.”’